B-401692, PR Newswire Association, LLC, November 5, 2009

Decision

Matter of: PR Newswire Association, LLC

File: B-401692

Date:November 5, 2009

Brian
Taylor for the protester.
Cheryl S. Mpande, Esq., Department of Health and Human Services, for the
agency.
Susan K. McAuliffe, Esq., and Christine S. Melody, Esq.,
Office of the General Counsel, GAO, participated in the preparation of the
decision.

DIGEST

Protest that contracting agency
improperly exercised a contract option is denied where protester has not shown
that agency failed to follow applicable regulations or that determination to
exercise option was unreasonable.

DECISION

PR Newswire Association, LLC,
of Washington, D.C., protests the exercise of the first option under contract
No. HHSP233200800187A, awarded to Business Wire, Inc., of Arlington, Virginia,
under request for proposals No. HHS-ASPA-NEWSDIVISION, issued by the Department
of Health and Human Services (HHS) for distribution of news releases and media
advisories. The protester contends that the agency's determination to exercise the option was improper.

We deny the protest.

As a matter of background, PR Newswire, which had previously
provided the required services to the agency, was awarded a sole-source
contract for the current requirement on December 20, 2007; that award was
protested by Business Wire. In response
to the protest, the agency canceled the award and issued a new solicitation for
a competitive procurement for the services.
That solicitation was published on the FedBizOpps website on May 28, 2008,
with proposals due by June 24. PR
Newswire did not submit a proposal. The
agency evaluated the proposals received and made an award, for a base year and
four option-year periods, to Business Wire on August 1, having determined that
the firm's proposal (which offered the lowest price and received high technical
ratings) offered the best value to the agency. PR Newswire protested that award,
contending that the agency failed to give the protester notice of the
procurement. Our Office denied the
protest since the publication of the solicitation on the FedBizOpps website
gave all potential offerors, including the protester, constructive notice of
the procurement. PR Newswire Ass'n,
LLC, B-400430, Sept. 26, 2008, 2008 CPD para. 178 at 2.

Toward the end of the base year period of performance under
Business Wire's contract, PR Newswire contacted the agency to announce that the
firm had recently received a General Services Administration (GSA) Federal
Supply Schedule (FSS) contract under which it could provide the services
required under the solicitation. The
protester advised that it would discount its FSS contract prices to offer a
more advantageous price to the agency than the price available under Business
Wire's contract for performance in the first option year. The protester initially stated that it would
perform the year's work for $10,000, but subsequently increased its price to
$10,750 to include a fee associated with its GSA FSS contract.[1] Business Wire's contract provided a price of
$12,240 for the first option year. The
agency conducted an informal analysis of market prices which failed to suggest
that lower prices would be submitted if a new competition was held; while the
agency did consider the protester's informal price of $10,750, it questioned
whether, in light of the firm's substantially higher FSS contract prices,[2]
and the fact that the firm already had increased its initial price (from
$10,000 to $10,750), the protester might increase its price again during a new
competition. In any event, the agency
found that the costs associated with conducting a new competition would
outweigh the savings associated with the protester's lower price, even if that
price were offered under a new solicitation.
The agency then chose to exercise the option available under Business
Wire's contract. This protest followed.

Before an option can be exercised, an agency must make a
determination that exercise of the option is the most advantageous method of
fulfilling its needs, price and other factors considered. Federal Acquisition Regulation (FAR) sect.
17.207(c)(3). This determination may be
based upon an informal market survey or price analysis that indicates that the
option price is lower or more advantageous, and the contracting officer may
consider other advantages from the exercise of the option. FAR sect. 17.207(c)(3), (d), (e). The contracting officer is accorded broad
discretion in making this determination, and our Office therefore will not question the decision to exercise an
option, rather than conduct a new procurement, unless it is shown to be unreasonable
or contrary to applicable regulations. Sippican,
Inc., B-257047.2, Nov. 13, 1995, 95-2 CPD para. 220 at 2.

We find no basis to question the agency's exercise of
the option here. As noted above, the record
shows that, before deciding to exercise the option, the agency conducted an
informal price analysis and considered the costs of reprocuring its requirement
instead of exercising the option. The
agency also took into account the fact that the awardee's performance was
satisfactory and that the option price was reasonable. In challenging the agency's decision to
exercise the option, the protester primarily questions the agency's informal
price analysis, arguing that it was based on prices for services that are not
comparable to the services required here.
We need not address the protester's contentions in this regard given
that the record shows that the agency also concluded that the administrative
costs associated with conducting a new competitive procurement for the services
would be at least $1,930 (reflecting the costs associated with, for instance,
preparing and issuing the solicitation, and reviewing proposals prior to making
an award). AR, Tab 1, Contracting
Officer's Statement at 5. This amount is
higher than the greatest potential savings associated with the protester's
informal offer of $10,750.[3]

Given that the agency considered the awardee's
performance acceptable, found the option price reasonable, and concluded that
any savings resulting from the protester's informal offer would be more than
offset by the costs of reprocurement, and in light of the agency's broad discretion
in this area, we have no basis to question the propriety of the agency's exercise
of the option. Person-System Integration,
Ltd., B-246142, B-246142.2, Feb. 19, 1992, 92-1 CPD para. 204 at 3; Washington
Consulting and Mgmt. Assocs., Inc., B-243116.2, July 19, 1991, 91-2 CPD para. 76
at 2-3.

The protest is denied.

Lynn H. Gibson
Acting General Counsel

[1]
The protester states that the $750 increase reflects the addition of the
Industrial Funding Fee, a fee associated with FSS contracts.

[2]
Using the prices on the protester's FSS contract, the agency calculated that
the protester's price for the required services would be almost four times
higher than the protester's informal price.
Agency Report (AR), Tab 1, Contracting Officer's Statement at 3.

[3]
That is, compared to Business Wire's option price of $12,240, there is a
potential savings of only $1,490 associated with the protester's informal offer
of $10,750.